Excellent post on The Conversation about what is actually proposed by Rudd & Bowen to change with the FBT rules next year:
This means that where the statutory formula method gives a lower taxable value than the cost method, the taxpayer is getting a tax concession.
This is recognised in the annual Tax Expenditure Statements issued by Treasury. The Tax Expenditure Statements contain a list of items where taxpayers are getting a tax concession, along with an estimate of the aggregate of the tax concession.
The statutory formula method is listed as a significant tax expenditure. On the other hand, where the statutory formula method gives a higher taxable value than the cost method and the employer fails to elect into the lower cost method (this will rarely happen), the employer is being (unfairly) overtaxed. This would be a negative tax expenditure.
The removal of the statutory formula method simply moves this part of the tax system back to a principled position by removing a tax concession. These facts have been completely lost in the “debate”.
The whinging of vested interests and the media’s speed in presenting their stories as being utterly valid without question leaves me disgusted. Any business that just complains when their operating environment changes, especially when they’ve been operating on what amounts to a rort, doesn’t deserve to be in the business in the first place. This is a repeat of the mining tax whinge writ small.
Edit: Michael Pascoe in the Fairfax press also has an excellent & incisive piece on this.